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Diamond Sales Online Vs. Diamond Sales on Traditional Stores

1990: Diamond Sales Online Are Only 7% of Total Diamond Retail Market

December 1999

The media is full of predictions of e-Commerce doubling—maybe even tripling—this year to somewhere between $6 and $9 billion. The Wall Street Journal even listed "jewelry and watches" as one of the areas where Internet sales should grow. Which may be why a lot of big-money web sites have premiered recently, selling extremely expensive high-end jewelry.

Should jewelers neglect their "brick and mortar" stores and run to the Internet? The answer is a definite NO—for three reasons:

1. The 100% jump in Internet sales still adds up to less than 5% of the total market overall. E-commerce is still a small (although growing) part of the overall retail scene. Even if it grows at its current projected rate, it will only amount to 7% of the total retail market, according to the New York Times.

2. The new e-tailers have made names for themselves by spending millions of dollars from venture capitalists. But will that money keep coming? "A lot of the dot-com retailers are going to fold after their venture capital money runs out," one analyst told the Times. Eventually, the web retailers are going to have to make money. That means they will start reflecting the cost of advertising and promotion in their prices, and will become less competitive.

3. Many customers will still want to see the stone before they buy — and if they don’t, they want to make sure the retailer has seen it. Some of these web sites simply list the inventory of on-line trading networks. That won’t do.

That doesn’t mean that retailers should neglect the web. A web page that gives referrals like the Diamond Registry’s should be part of every jeweler’s marketing plan.

But in the end, the established jeweler and diamond wholesaler already have reputations and customers’ trust. The companies have to buy it for millions.


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